The Vindication of the IRS

Back in April of 1998, several employees of the Internal Revenue Service (IRS) came before the Senate oversight committee to testify about a litany of supposed fraud and abuse at the agency. IRS officials, they charged, had pursued vendettas against outside individuals and corporations and fudged audits to help former co-workers who had moved to private industry. Many Republicans, especially antitax crusaders, denounced the IRS as just one more overbearing government agency in need of comeuppance--which they promptly delivered via the Internal Revenue Service Restructuring and Reform Act of 1998, signed into law by President Clinton the summer after the hearings.

They may have been too hasty. In late April, the IRS released a report completed by the General Accounting Office (GAO) in 1999 but kept confidential for nearly a year. GAO investigators found that although "witnesses were correct in some of the facts supporting their allegations in some of the cases ... the allegations themselves had been based on an incomplete awareness of the total circumstances surrounding the matters." In other words, they found no evidence that IRS officials had acted improperly. "Generally, we found no corroborating evidence that the criminal investigations described at the hearing were retaliatory against the specific taxpayer," wrote the GAO. And the investigators "did not find any evidence" to support allegations of audit-fudging. Perhaps the Senate Finance Committee could be a little less credulous next time?